Current Payments and Capital Movements in the EU-Mediterranean Association Agreements

Abstract

The objective of this paper is to elaborate current and capital provisions in the European Union Association Agreements with the Mediterranean countries and their compatibility with the EC Treaty and the international multilateral agreements. These provisions can be classified into two categories. The first has fully liberalised current payments and demanded the progressive liberalisation of capital movement. The second has liberalised capital movements and demanded the progressive liberalisation of current payments. Accordingly, the outcome of this classification is that the Association Agreements, firstly, could not promote the liberalisation of current payments and capital movements in the Mediterranean countries. Secondly, they lag behind the virtual free movement of capital and payments among the parties. Finally, they could not recognise the relationship between current/capital transactions and the IMF, GATS and GATT.